Baby Bunting Group Ltd. · ASX:BBN
Baby Bunting — Investor Day (June 2024)
54 slides from Baby Bunting's investor day presentation, Jun 27, 2024
Slide 1: Investor Day
Investor Day Mark Teperson, CEO Darin Hoekman, CFO 27 June 2024
Slide 2: Important notice and disclaimer
Important notice and disclaimer Forward looking statements Pro forma financial information This document is a presentation of general This document contains certain forward looking statements and Pro forma financial results have been calculated to exclude background information about the activities
Slide 3: Agenda
Agenda 1. Executive summary CEO 2. The customer CEO 3. Our immediate opportunities CEO 4. Returning to growth CEO 5. Grow market share CEO 6. Grow EBITDA CEO 7. Grow return on invested capital CFO 8. Capability platform CEO 9. Investment & execution plan CEO 10. The best start for the brightest futu
Slide 4: Executive summary
1. Executive summary Mark Teperson, CEO 2
Slide 5: CEO's observations
1. Executive summary CEO’s observations Baby Bunting has a strong core business and market position as Australia’s leading specialty nursery retailer The positives Focus areas for improvement Market leading omni-channel ecosystem • Margins under pressure • 70 AU omni-channel stores with strong unit
Slide 6: Trading update
1. Executive summary Trading update FY24 pro forma NPAT guidance reaffirmed FY24 trading update • Total sales 1 May 2024 to 24 June 2024 were up 1.0% • Comparable store sales 1 May 2024 to 24 June 2024 were down 0.7% • Comparable store sales 1 January to 24 June 2024 were negative 5.6% • Reaffirm FY
Slide 7: Disciplined balance sheet management
1. Executive summary Disciplined balance sheet management Extended NAB Facility with existing pricing providing covenant headroom Extension of existing NAB Debt facility Headroom for current trading • Rolled over our existing NAB facility • Baby Bunting maintains a strong (was due to mature in March
Slide 8: Growth plan
1. Executive summary Delivering shareholder value Growth 1 • Leverage our strength in nursery essentials (hard goods) plan Strengthen market Grow • Capitalise on significant opportunity in position Market soft goods market through our market share leading hard goods offer Baby Bunting has a strong c
Slide 9: Our market: $6.3 billion ANZ TAM and growing
1. Executive summary Our market: $6.3 billion ANZ TAM and growing Significant opportunity to grow and leverage our leadership in hard goods (~23% market share) to grow our share of soft goods Our core competency The opportunity in soft goods 1.8 3.4 $ $ Incremental 1% gain in soft goods market Bn ~2
Slide 10: Long Term EBITDA Growth
1. Executive summary Long Term EBITDA Growth Clear path to achieve Cost of Doing Business initiatives historical EBITDA margins Lowering our variable costs ~10% 10% EBITDA margin • Supply Chain efficiencies achieved in FY22 through • Customer Care productivity Targeting a +500 bps sustained improvem
Slide 11: Grow Gross Margin
1. Executive summary Grow Gross Margin In FY25, we are targeting 40% gross margin with further expansion targeted in future years ~42% In progress In progress In progress 1.5% In progress ~37% Achieved FY24 margin Simplify price Trading Amplify Scale private De-range Medium term target architecture
Slide 12: Building a media business & driving customer lifetime value
1. Executive summary Building a media business & driving customer lifetime value Shopping Leveraging our platform through data & analytics Demographics Segment: High Value 34 years old 5 orders, 12 products Richmond, VIC Hasn’t bought a pram Through our transaction & loyalty data • Offer our partner
Slide 13: Optimise and grow store network
1. Executive summary Small format store pilots expected to Optimise and grow store network Small format be in market Q4 FY25 followed by a period of testing Expanding the store network into new catchments and meeting stores will enable and assessment opportunity to more needs of parents through new
Slide 14: The customer
2. The customer Mark Teperson, CEO 12
Slide 15: An evolving customer base
2. The customer An evolving customer base Changing customer behaviour 15 years ago our core Today our core In 5 years Gen Z will customer was a Gen X customer is a Millennial be our core customer Our current customer is different to our Gen X Millennial Zoomers future customer 1965-1980 1981-1996 19
Slide 16: The best start for the brightest future
2. The customer Our Vision The best start for the brightest future 14
Slide 17: To support & inspire confident parenting
2. The customer Our Mission To support & inspire confident parenting, from newborn to toddler 15
Slide 18: Customer Value Proposition
2. The customer Customer Value Proposition What we promise to deliver to our customers Choice Service Experience Value We offer ANZ's widest range We draw on 45 years of We go beyond the transaction We deliver exceptional value of carefully curated product expertise to offer best in class to provide
Slide 19: Our immediate opportunities
3. Our immediate opportunities Mark Teperson, CEO 17
Slide 20: Our immediate opportunities
1. Introduction 3. Our immediate opportunities Our immediate opportunities Stabilising and optimising the business to improve trade and performance New customer Gross margin: Reset on Uplift store experience: Focus on operational acquisition: Evolve go-to- supplier relationships to To evolve our ret
Slide 21: Returning to growth
4. Returning to growth Mark Teperson, CEO 19
Slide 22: Growth objectives and deliverables
4. Returning to growth Returning to growth Growth objectives Deliverables 1 Enhance Grow customer experience Market Market leading Exceptional Best-in-class Data & Analytics share products experiences services 2 Drive platform Grow leverage EBITDA Gross Margin Media New Zealand Operating business pr
Slide 23: Grow market share
5. Grow market share Mark Teperson, CEO 21
Slide 24: Re-imagining our Customer Experience
Returning to growth 5. Grow market share Our Market Share strategy is delivered by re-imagining our Customer Experience Deepening customer relationships and enhancing lifetime value Delivering a re-imagined Customer Experience that aims to: • Drive New Customer Acquisition Market Exceptional leading
Slide 25: Grow strategic categories and improve our product offer
Returning to growth 5. Grow market share Market leading products Grow strategic categories and improve our product offer Focusing on product innovation and providing a pathway for newness Leveraging our robust position Driving growth Providing customers New Leverage in Nursery Essentials, to: Produc
Slide 26: Our new store experience
Returning to growth 5. Grow market share Exceptional experiences Our new store experience We're making Australia's best specialty store network even better Each store is an experience a distribution a stage for centre centre our brand for our customers for our products partners to showcase their inn
Slide 27: Our new store experience: timetable
Returning to growth 5. Grow market share Exceptional experiences Our new store experience: timetable We're making Australia's best specialty baby goods store network even better Brand Creative Platform In-store Experience Design Retail Customer Experience Design Build Prep Construction Open Peripher
Slide 28: Omni-channel as a force multiplier
Returning to growth 5. Grow market share Exceptional experiences Omni-channel as a force multiplier Our store network and our online channel together drive greater customer lifetime value An Omni-channel 74% customer is worth Large Format Stores Small Format Stores1 Digital Channels of new customer
Slide 29: Expanding best-in-class services
Returning to growth 5. Grow market share Best-in-class services Expanding best-in-class services Providing services creates network effects in our core categories on a national scale Car seat New 1-on-1 personalised New Re-Condition; installations appointments Pram Cleaning Service Delivering expert
Slide 30: Leveraging data & analytics to grow loyalty and lifetime value
Returning to growth 5. Grow market share Data & Analytics New Leveraging data & analytics to grow loyalty and lifetime value Through our transaction & loyalty data we see: Shopping • 3.4m transactions Segment: High Value • 800k active loyalty customers Demographics 5 orders, 12 products • ~90% of tr
Slide 31: Grow EBITDA
6. Grow EBITDA Re-establish business back to +10% EBITDA margin Mark Teperson, CEO 29
Slide 32: Long Term EBITDA Growth
Returning to growth 6. Grow EBITDA Long Term EBITDA Growth Clear path to achieve Cost of Doing Business initiatives historical EBITDA margins Lowering our variable costs ~10% 10% EBITDA margin • Supply Chain efficiencies achieved in FY22 through • Customer Care productivity Targeting a +500 bps sust
Slide 33: Grow Gross Margin
Returning to growth 6. Grow EBITDA Grow Gross Margin In FY25, we are targeting 40% gross margin with further expansion targeted in future years ~42% In progress In progress In progress 1.5% In progress ~37% Achieved FY24 margin Simplify price Trading Amplify Scale private De-range Medium term target
Slide 34: Building a media business: unlocking the value of our platform
Returning to growth 6. Grow EBITDA Building a media business: unlocking the value of our platform Realising a new revenue stream through monetising our existing in-store and digital assets • Offer our partners an unparalleled opportunity to engage with a dedicated Customers audience of new and expec
Slide 35: Building New Zealand profitability
Returning to growth 6. Grow EBITDA Building New Zealand profitability Scale NZ to positive earning contribution through store roll-out and operating leverage Actions completed • We are building scale in New Zealand, with three • Expanded NZ team in Q4 FY24 (3x new stores opened in late Q2 FY24. Our
Slide 36: Group Operating Leverage
Returning to growth 6. Grow EBITDA Group Operating Leverage Active cost management as we scale store network Lowering our variable costs Leverage systems investment Simplify operating structure Targeting incremental Focus on productivity Simplify organisation around improvements across the network i
Slide 37: Grow return on invested capital
7. Grow return on invested capital Darin Hoekman, CFO 35
Slide 38: Grow Return on Invested Capital
Returning to growth 7. Grow return on invested capital Grow Return on Invested Capital Unlocking value from our existing assets and disciplined future investments Grow store network Refurbishing existing Inventory productivity Re-platforming ERP/POS New New store roll-out store network Focus on work
Slide 39: Grow store network
Returning to growth 7. Grow return on invested capital Grow store network Small format store pilots expected to Grow store network Small format be in market Q4 FY25 followed by a period of testing Expanding the store network into new catchments and meeting stores will enable and assessment opportuni
Slide 40: Large format stores deliver great returns
Returning to growth 7. Grow return on invested capital Grow store network Large format stores deliver great returns 25% of stores are in their growth phase with new store roll out to come Mature Metro Stores (>4 yr) • FY2022 was the historical high watermark in Metro Australia FY2020 FY2022 FY2024 t
Slide 41: Network growth plan
Returning to growth 7. Grow return on invested capital Grow store network Network growth plan Growing the network leverages our omni-channel capability and has a compounding effect on network sales 41 identified catchments Existing network Australia with online sales today 41 New Store network catch
Slide 42: Small Format Stores
Returning to growth 7. Grow return on invested capital Grow store network Small Format Stores Home Pilot new small format store to target higher traffic areas and grow Customer Lifetime Value Unlock high value smaller catchments that Park do not currently support our large format store (inner urban
Slide 43: Capability Platform
8. Capability Platform We are enhancing our Capability Platform, focusing on our people and investing in new ERP and POS technology Mark Teperson, CEO 41
Slide 44: Build New Capability Platforms
8. Capability Platform Build New Capability Platforms New Platforms: Unlocking Capabilities, Powering Potential Data & Analytics Growth Marketing Investment in Training New New New Muscle & Digital Trade Capability & Service Delivery Data Mastery: Driving Fuelling Sustainable Growth with Empowering
Slide 45: Recalibrate Existing Capability Platforms
8. Capability Platform Recalibrate Existing Capability Platforms Refining Platforms: Sharpening Skills, Enhancing Execution Re-imagine Re-energise Re-platform Product Development Merchandise Planning & Supply Chain ERP & POS Doubling down on Private Label Optimising Performance: Smarter Streamlining
Slide 46: Investment & Execution Plan
9. Investment & Execution Plan Mark Teperson, CEO 44
Slide 47: Our investment and execution plan
9. Investment and execution plan Our investment and execution plan Phasing our investment plan to address immediate issues and build into the future F24 F25 F26 F27 F28 F29 Ongoing Stabilise business Optimise business $0.8m-$1m capex 1 Phase 1: Store of the future Targeting <3yr New store Pilot 3 ne
Slide 48: FY25 financial objectives
9. Investment and execution plan FY25 financial objectives Funding growth initiatives through improved operating cashflow 1 2 3 Stabilise sales Targeting 40% gross margin Progress and embed FY25 capital investment • Range innovation, • Simplifying Price Architecture productivity initiatives program
Slide 49: The best start for the brightest future
10. The best start for the brightest future Mark Teperson, CEO 47
Slide 50: Growth plan
10. The best start for the brightest future Delivering shareholder value Growth 1 • Leverage our strength in nursery essentials (hard goods) plan Strengthen market Grow • Capitalise on significant opportunity in position Market soft goods market through our market share leading hard goods offer Baby
Slide 51: Q&A
11. Q&A 49
Slide 52: Appendix
BabyBunting a» = Appendi
Slide 53: Pro forma financial performance
11. Appendix Pro forma financial performance 2016-2023 507.3 515.8 468.4 195.8 192.9 Sales Gross margin 405.2 173.7 362.3 146.9 $m $m 304.5 126.7 278.0 236.8 95.3 100.9 81.2 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Comp Growth 12.5% 6.9% -0.2% 8.7% 4.9% 11.3% 5
Slide 54: Macro trends supporting future growth
11. Appendix Macro trends supporting future growth Tailwinds support long-term market growth Projected population Australia • ~300,000 births p.a. in Australia run rate High over 20 years series 45m • Strict mandatory product safety standards 300 differentiates Australia from global markets k • Aust